Why HOOD May Stand To Lose From Congress's Prediction Market Bill Frenzy

Rep. Ritchie Torres (D-N.Y.) is preparing to introduce yet another prediction market bill, this one criminalizing the use of campaign funds to bet on platforms like Kalshi and Polymarket. Axios reported on Tuesday that it is the latest in a string of more than a dozen prediction market bills introduced in Congress this year. None has made meaningful progress, and the cumulative regulatory overhang now looms over Robinhood Markets (NASDAQ:HOOD), whose event contract revenue has become one of Wall Street’s fastest-growing line items. The $147 Million Question Robinhood reported $147 million in event contract revenue in the first quarter, up 320% year-over-year, with customers trading a record 8.8 billion contracts through its Kalshi-powered hub. The brokerage and Kalshi split a two-cent fee per contract, and Robinhood has historically driven half of Kalshi’s total volume. Its most recent 10-Q flags the risk directly, warning that federal or state law changes could prevent it from offering event contracts at all. The irony for HOOD shareholders is that Kalshi is the fully CFTC-regulated venue. The scandal driving the congressional panic happened on Polymarket, the offshore, crypto-native site that operates outside the same guardrails. Robinhood Is Not Alone Interactive Brokers (NASDAQ:IBKR) launched its own unified prediction markets platform last Thursday, aggregating Kalshi, CME Group, and its own ForecastEx exchange under one interface. Thomas Peterffy‘s firm is positioning event contracts as a new monetization layer alongside stocks and options, the same playbook driving HOOD’s growth. Why The Bills Keep Stalling The push began in January, when an anonymous Polymarket account turned a $30,000 bet on the capture of Venezuelan leader Nicolas Maduro into roughly $400,000 in hours. A US Army soldier was later charged with using classified intelligence to place the bet. Despite the legislative pile-up, a Polymarket contract on whether a law banning sports prediction markets will be enacted in 2026 trades at just 13%. The Trump administration’s posture may explain why. Donald Trump Jr. serves as a paid strategic adviser to Kalshi and holds a stake in Polymarket through his venture firm 1789 Capital. The CFTC, now run by Trump-appointed chairman Michael Selig, has sued multiple states attempting to enforce gambling laws against the platforms. For Robinhood and Interactive Brokers, the regulatory risk is more headline than statute, and the next earnings call may be the one where analysts ask how much of the event contract boom is in regulatory crosshairs. Image: Shutterstock